In 2002 the music industry was in a slump. Declining CD sales and rampant piracy had eaten into profits and labels were desperate.

Steve Jobs saw an opportunity. Apple had launched the iPod the year prior and he wanted a digital music store to pair with it. So meetings were held with record labels and a deal was struck with the five major labels – Universal, Sony, Warner, EMI, and BMG.

But in their piracy panic and desire to get profits back the labels undersold themselves. Firstly, they gave Apple control over the pricing. iTunes could sell songs individually, at $0.99. Users didn’t have to buy the full $9.99 album anymore.

But more importantly they simply underestimated how big digital music would become and sold the rights for what in hindsight would be a fraction of their true value.

In 2007 a similar story unfolded when Netflix launched their streaming platform. When they went to studios and networks about buying digital rights they were more than pleased to sell them at a low rate. To them it was free money. Streaming was seen as a perpetual secondary market to DVD sales and cable TV. And most of the rights Netflix wanted were for back catalog movies and TV shows. Content that didn’t produce much income anyway.

Hollywood made the same mistake the music industry made. They didn’t realise the value of what they had because they underestimated what a new technology – digital streaming – would become.

Web publishers are now in a similar position. Their profits have been dwindling for years and they’re searching for new revenue streams.

So when the AI companies that had been scooping up their content for free started getting $80 billion valuations the web publishers wanted their piece.

Just like the record labels, they wanted the ‘piracy’ – AI web crawlers scooping up anything and everything free of charge – to be stopped. So deals have started being made. The Associated Press, News Corp, the Financial Times, reddit, Stack Overflow and Vox and more have all done deals.

But the question remains: have they underestimated the value of their content, just as the music industry and Hollywood did before them? It’s tempting to think that with the current mania for AI, a $250 million deal over five years might be a win for a publisher like News Corp.¹

But history tells me to doubt it. Media companies rarely value their content accurately in the face of new technologies. My bet is on the AI companies knowing the true worth of this data and the publishers are selling them the very content they need to eventually supersede them. Publishers are giving away the keys to their own kingdom.